Correlation Between Thai Beverage and SYSTEMAIR

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Can any of the company-specific risk be diversified away by investing in both Thai Beverage and SYSTEMAIR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thai Beverage and SYSTEMAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Beverage Public and SYSTEMAIR AB, you can compare the effects of market volatilities on Thai Beverage and SYSTEMAIR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thai Beverage with a short position of SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and SYSTEMAIR.

Diversification Opportunities for Thai Beverage and SYSTEMAIR

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Thai and SYSTEMAIR is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and Thai Beverage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thai Beverage Public are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Thai Beverage i.e., Thai Beverage and SYSTEMAIR go up and down completely randomly.

Pair Corralation between Thai Beverage and SYSTEMAIR

Assuming the 90 days horizon Thai Beverage is expected to generate 1.37 times less return on investment than SYSTEMAIR. But when comparing it to its historical volatility, Thai Beverage Public is 1.08 times less risky than SYSTEMAIR. It trades about 0.07 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  566.00  in SYSTEMAIR AB on September 26, 2024 and sell it today you would earn a total of  202.00  from holding SYSTEMAIR AB or generate 35.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Thai Beverage Public  vs.  SYSTEMAIR AB

 Performance 
       Timeline  
Thai Beverage Public 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Thai Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.
SYSTEMAIR AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Thai Beverage and SYSTEMAIR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thai Beverage and SYSTEMAIR

The main advantage of trading using opposite Thai Beverage and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, SYSTEMAIR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.
The idea behind Thai Beverage Public and SYSTEMAIR AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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